Fast food chains need to do more to mitigate climate risk, global coalition warns

14 Jun 2022 --- The Global Investor Engagement on Meat Sourcing coalition has homed in on six fast food companies to de-risk their meat and dairy supply chains by setting targets to reduce their GHG emissions and water use following a report that demonstrates the companies have not done enough to reduce climate risk.

Chipotle Mexican Grill, Domino’s Pizza, McDonald’s, Restaurant Brands International (RBI) (owners of Burger King), Wendy’s Co. and Yum! Brands (KFC, Pizza Hut and Taco Bell owners) with a combined market cap of more than US$281 billion have been called to further reduce emissions across supply chains.

“Investors are very concerned that ambitious climate targets by fast food companies are not translating into action along the supply chain,” Cristina Figaredo, senior manager, research & engagement, Farm Animal Investment Risk and Return (FAIRR), tells FoodIngredientsFirst.

“This engagement targets some of the most recognizable brands in the world. If such global names could show leadership in decarbonizing their supply chains, and addressing their impacts on freshwater resources – we are hopeful that other companies would follow,” Figaredo continues. 

Addressing water management concerns
The three-year global investor engagement with the fast-food giants has resulted in significant progress on climate targets. Still, the investors are concerned about the management of emissions and water use in the supply chain, according to a new progress report published today by the global investor network FAIRR and the sustainability organization Ceres.The report finds that none of the fast-food firms have set enterprise-level targets to reduce water pollution.

“The supply chains of these companies are long and complex, and are drivers of local water scarcity and pollution issues in areas they operate around the world. It is vital that these issues are addressed to secure safe freshwater supplies into the future,” says Figaredo.

Keeping up with SBTi
According to the Global Investor Engagement on Meat Sourcing Progress Update 2022, all six fast-food companies have publicly set or committed to set science-based targets approved by the SBTi.

“Regulators and influential frameworks such as the Science-Based Targets initiative (SBTi) are tightening requirements for the food sector to report and act on climate,” Figaredo explains.

More than 90% of these companies’ emissions come from scope 3 emissions, where suppliers of meat and dairy products are a key concern and play a significant role, the report details. However, only two of the six firms, RBI and Yum! disclosed total emissions derived from animal agriculture.

Investors warn this lack of transparency in the animal agriculture supply chain could undermine the efforts of food brands to tackle climate risk. Chipotle has committed to reducing scope 1, 2 and 3 emissions by 50% by 2030.  

“The lack of alignment of supplier policies with corporate climate ambitions undermines the efforts of these high-street brands to tackle climate risk. Their performance on water is also alarmingly poor, and efforts to mitigate risks related to water scarcity and pollution have stagnated over the past year,” says Figaredo. 

Food industry water use in the spotlight
The report finds that none of the fast-food firms have set enterprise-level targets to reduce water pollution and consumption across their supply chains.

While companies such as Wendy’s, McDonald’s and Yum! have begun setting targets to address the water impacts in their operations, investors continue to stress that they are failing to address larger risks within the agricultural supply chain.

“We are particularly focused on advancing better water risk management in supply chains, an often overlooked, but equally important, side of the climate change coin,” says Daniel Shepard, senior associate of investor engagement, water, Ceres.Reducing water pollution is a key concern according to the findings of the Global Investor Engagement on Meat Sourcing Progress Update 2022.

Meanwhile, RBI has not disclosed any efforts to analyze water risks in their operations. McDonald’s has conducted a comprehensive water risk assessment that includes its supply chain. 

According to the report, five of the six companies may be unaware of how much water is being drawn from areas of high water stress, resulting in water scarcity risks.

Climate commitments
Brands and suppliers across the F&B industry are taking steps to reduce their environmental impact. 

FrieslandCampina published a climate plan outlining objectives to produce net climate-neutral dairy by 2050. The “Towards climate-neutral dairy” plan is part of FrieslandCampina’s integral sustainability program: Nourishing a better planet.

Alongside its fourth Sustainability Report, Terrascope has also introduced its Sustainability Roadmap 2025. The roadmap defines how the company drives transitions toward healthier lifestyles and sustainable food supply chains.

Meanwhile, agri-food commodities player Olam Group launched Terrascope, an end-to-end smart carbon management platform to help companies develop their climate action strategies in their decarbonization journey toward net-zero emissions.

In addition, the Circularity Gap 2022 Report warns that world leaders are missing the opportunity to achieve deep cuts in emissions by adopting circular economy strategies that reduce the demand for resources.

By Inga de Jong